Tuesday, June 10, 2008

Red tapes under the red flag

Excerpt from my Op-Ed published today in The Kathmandu Post:
I wonder what route the economic system would take when the leaders of the red flag formally take over executive powers of a new federal democratic republic of Nepal. It seems a no brainer that the Maoists won't part away from their socialist roots because it is the same base from where they ascended to power.

But, the exact mode of economic system under the Maoist leadership is still ambiguous. Of late, the Maoists' second-in-command Baburam Bhattarai defined his party's economic slogan as “new transitional economic policy,” which essentially means development of industrial capitalism -- oriented towards socialism. This policy rests on two components: scrapping feudalism and bestowing more rights to the working class and landless people by following the Marxist bourgeois-proletariat principles. This sounds grand and scary!

Doing away with the “remnants of feudalism -- feudal production relations - and developing industrial relations oriented towards socialism - which would solve long-term demands of the working class” is easier said than done. Practically, this might lead to creative destruction of existing production capacity without compensatory creative creation of new and better opportunities. History shows that any drastic reform in this direction only exacerbates the situation, leading to far-reaching consequences in industrial relations, international relations, and capital investment both from domestic and foreign investors.

One of the main agendas of the Maoists is to abolish the feudal system and its production relations through land reform that is consistent with the Marxian/socialist views. To put it in Bhattarai's own words, the Maoists' interpretation of this policy is “revolutionary land reform based on the principle of land to the tiller.” Unfortunately, we can hardly find the mercantilist system, i.e. Zamindari and landlordism systems so entrenched and widespread that it requires a complete overhaul of the economic system to rectify the problems in land ownership.

Arbitrary enforcement of failed principles of “absenteeism landlordism” and “land to the tiller” would be plainly inconsistent with the present state and evolution of our economic system. Of course, the system is far from perfect and is flawed in some aspects.The reason is not because of the tussle between bourgeois and proletariat classes but because of the absence of political consensus on a specific long-term economic plan for the country, fragile and capricious industrial relations often battered by union strikes, weak governance, political instability, and deeply entrenched corruption in almost all levels of bureaucracy, among others.

Reforming the economic system requires improving existing inefficient institutions and creating new ones in case of deficiency of appropriate institutions, not revival of failed and antiquated Marxist ideas.
Continue reading the Op-Ed here